Letter urges exemption from CARD Act date

October 22, 2009

FOR IMMEDIATE RELEASE
Contact: Patrick Keefe, CUNA Communications (202) 508-6765
pkeefe@cuna.com
Jay Morris, NAFCU/(703) 842-2223;
jmorris@nafcu.org

Letter urges narrowing CARD bill impact

CUNA this morning sent the following letter to House Financial Services Committee Chairman Frank and Ranking Member Bachus in support of an amendment offered by Reps. Brad Sherman (D-Calif.) and Shelly Capito (R-W.V.) to exempt depository institutions with fewer than 2 million credit cards in circulation from the expedited effectives of the underlying bill, HR 3639. The committee approved the amendment on voice vote today:

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October 22, 2009

The Honorable Barney Frank
Chairman
Committee on Financial Services
United States House of Representatives
Washington, DC 20515

The Honorable Spencer Bachus
Ranking Member
Committee on Financial Services
United States House of Representatives
Washington, DC 20515

Dear Chairman Frank and Ranking Member Bachus:

On behalf of the Credit Union National Association (CUNA), I am writing in support of the Sherman-Capito Amendment to H.R. 3639, the Expedited CARD Reform for Consumers Act, which would narrow the application of the bill to credit card issuers with more than 2 million credit cards in circulation. CUNA is the nation’s largest credit union advocacy organization, representing approximately 90% of America’s 8,000 state and federal credit unions and their 92 million members.

During the consideration of the Credit Card Accountability, Responsibility, and Disclosure (CARD) Act, CUNA recognized that the concerns about abusive credit card practices were legitimate, even though it was generally acknowledged that credit unions do not engage in abusive practices. As we testified before your Committee in March, we applauded the efforts to end discriminatory, predatory, deceptive and abusive lending practices. However, we also noted that these efforts should be balanced to avoid unintended consequences, which would ultimately be adverse to consumers, including making credit more expensive and less available. In our testimony, we also highlighted the effective dates of the then-proposed legislation as among our greatest concerns.

Four months after enactment of the CARD Act, credit unions and their members have been significantly affected by the unintended consequences of a specific provision of the CARD Act; and, the relatively quick effective and compliance dates have compounded the problems credit unions face in order to comply with the new law. Without the Sherman-Capito Amendment, H.R. 3639 has the potential to make matters even worse for credit unions and their members.

Some have suggested that moving the effective dates from February to December will only affect the largest credit card issuers; however, half of the nation's credit unions issue credit cards, and 84% of credit union members belong to a credit union that offers credit cards. Accelerating the effective date could raise even greater compliance concerns for credit unions as opposed to larger issuers because they do not typically run their own credit card operations and therefore cannot simply pour more resources into their programs to comply on short notice. Credit unions rely upon third-party vendors to provide necessary support, and these vendors are working diligently to comply by the February 2010 effective date.

Data processing changes are still being developed and need to be tested, and additional Regulation Z changes to implement other provisions of the CARD Act were just proposed earlier this month. Imagine the harm consumers would experience if credit unions and other issuers were forced to implement changes that had not been fully tested. Eliminating any time for testing data processing changes will inevitably produce a tremendous number of errors, and consumer inquiries and complaints. In addition, the Regulation E amendments required by the CARD Act to impose restrictions on gift cards have not even been proposed by the Federal Reserve. Simply put, many steps need to be taken before credit unions and others will be able to comply with the new law in any orderly fashion; while the three month period between December and February is a relatively short period of time, it is a critical period of time for credit unions to take these necessary steps.

The Sherman-Capito Amendment recognizes the burden that these expedited effective dates would have on small issuers, and we encourage the Committee to adopt the amendment. On behalf of the Credit Union National Association, thank you very much for your consideration.

Sincerely,

Daniel A. Mica
President & CEO

Copyright © 2009 - Credit Union National Association, Inc.